The inaction of the government in the matter of the multiple revelations relating to black money is for everyone to judge from the chronology of events.
On July 4, 2011, the Supreme Court (a bench comprising Justice B. Sudershan Reddy and Justice S.S. Nijjar) delivered a judgment relating to illicit money stashed in foreign tax havens. This judgment has since then received both bouquets and brickbats. An astute well-wisher suggested an article setting out the facts, and only the cardinal facts, which would dissipate the fog caused by disinformation and misapprehension, to enable the public to form an independent judgment. Justice P.N. Bhagwati, after quoting with approval James Madison, who said that “knowledge will forever govern ignorance and a people who mean to be their own governors must arm themselves with the power knowledge gives,” had added: “The citizens' right to know the facts, the true facts, is thus one of the pillars of a democratic state.”
It is essential for readers to know that this author throughout appeared ‘pro bono' for the petitioners in that case. The petition, based on an article by Professor R. Vaidyanathan, was filed by Ram Jethmalani, MP; Gopal Sharman and Jalabala Vaidya, actors and theatre personalities; K.P.S. Gill, a former Director General of Police of Punjab; Professor B.B. Dutta, a former Congress MP; and Subhash Kashyap, a former Secretary General of the Lok Sabha.
The petitioners' case
The petition averred that according to the Global Financial Integrity Report, the estimated amount of illicit Indian money stashed abroad equals $1.4 trillion (equivalent to 70 lakh crore — the figure ‘7' with 13 zeroes); that the U.S. government had taken vigorous steps against the Swiss bank, UBS, and as a result it agreed to pay $780 million in fines under a “Deferred Prosecution Agreement”; that Hassan Ali Khan was alleged to have deposited over $8 billion with UBS in Zurich and the Income Tax demand against him was over Rs.40,000 crore; and that the German government had offered to give free of charge to any government the names of its nationals who have accounts with LGT Bank Liechtenstein (an independent European country). It further stated that “the colossal failure to enforce the law and get back the stolen property of the Indian nation is due to the fact that influential politicians in most of the political parties are involved in the offences in question” and that “the Indian people have been deprived of assets which if available would substantially contribute to developmental work in India.” Appropriate orders from time to time were prayed for to ensure a proper investigation.
Government's case
The government contended that it was taking active initiatives with the G20 countries to bring about greater transparency and disclosure of information by tax havens including Switzerland by renegotiating agreements. It said that the information that had come from Germany regarding LGT Liechtenstein bank accounts was confidential under the Double Taxation Avoidance Agreement (DTAA) with Germany. Also, the ‘nodal agency' as directed by the Supreme Court in the Vineet Narain Case based on the N.N. Vohra Committee Report to coordinate action into cases of politico-bureaucrat-criminal nexus was “currently functional;” the petitioners were not acting in a bona fide manner. According to the Additional Solicitor General, “the situation is totally under control” (The Hindu, April 23, 2009). They wanted the petition to be summarily dismissed.
Undisputed or admitted facts
It was admitted that a tax demand of Rs.71,848.59 crore was made against Hassan Ali Khan and his wife; that he was accused of unauthorised dealings to the extent of $8 billion; that in view of the fact that no criminal case was pending against Mr. Ali Khan, recourse could not be taken to the Mutual Legal Assistance Treaty in criminal matters (between the Indian and Swiss governments) and thus no headway could be made at that time; that he was accused of having fraudulently obtained multiple Indian passports; that a criminal case was registered on January 8, 2007 against him and his wife for money laundering, in respect of which the letters rogatory issued in July 2009 to several countries stated that “the documents procured during investigation point towards amassing of huge funds suspected to be proceeds of crime, which have been invested in various immovable and movable assets including deposits in various banks in a number of countries around the world by resorting to the illegal process of money laundering. It further transpired that they had close relation with Adnan Khashoggi and funds deposited in the account are the proceeds from weapon sales.”
Petitioners' response
In a series of written submissions, the petitioners posed several questions. Why was the source of money of such large amounts, for which an Income Tax notice raising a demand of Rs. 71,848 crore was made, not being investigated? Why was Hassan Ali Khan not custodially interrogated after arrest? Why were investigations not undertaken to ascertain whether Hassan Ali Khan is a benamidar for powerful individuals? Why was nobody apprehended or interrogated in the last five years in relation to money laundering and slush funds parked abroad? Why was the Mutual Legal Assistance Treaty in criminal matters with Switzerland not invoked after a criminal investigation started? It was argued that a new protocol of 2010 with Switzerland for exchange of information would apply only to prospective information and not to past information regarding transactions and accounts in Swiss banks. This amounted to shielding wrongdoers.
Crucial hearings
After Chief Justice K.G. Balakrishnan's retirement in May 2010, the matter gathered speed. On January 19, 2011, after perusing the confidential report/affidavit given by the respondents, the court described the money stashed abroad in foreign banks as “pure and simple theft” — “plunder of the nation” (The Hindu, January 20, 2011). On March 3, 2011, the court after reading the status report and the letters rogatory, remarked: “What the hell is going on in this country?” (The Hindu, March 4, 2011). The court was “deeply disturbed by the ongoing investigation,” and remarked that Khan's questioning was done at his convenience with investigating officials putting off meetings at his behest. The court observed: “It is like a friendly chat. Why the custodial interrogation is not there?” (The Times of India, March 4, 2011). Only thereafter, Hassan Ali Khan and his wife were arrested on March 6/7, 2011 and custodially interrogated.
On March 8, 2011, the Solicitor General acknowledged that the concern expressed by the court was fully justified. This was widely reported (The Hindu, March 9, 2011). On April 25, 2011, the government produced a notification dated April 22, 2011 constituting a high-level committee of 10 officials and argued that there was now no need to set up a Special Investigating Team.
The petitioners responded in writing that this was merely a ruse and a façade to keep total and exclusive control over all investigations by bureaucrats and officials who are subservient to the political executive and cannot take action against them. The ‘nodal agency' was never consulted, though four of its members were included in the high-level committee. The petitioners pressed for an independent monitoring group/team to act as the court's ‘eyes and ears' as it was not possible for the court to monitor the case on a day-to-day basis.
What the judgment directs
The judgment retains the officials in the high-level committee as part of the Special Investigating Team, but adds two distinguished former judges of the Supreme Court, Justice B.P. Jeevan Reddy and Justice M.B. Shah, as chairman and vice-chairman respectively. The Director of Research and Analysis Wing (RAW) has been added as a member. The court also directs disclosure of names of Indians holding accounts in LGT Bank Liechtenstein, with safeguards.
The following is a summation. First, Hassan Ali Khan and his wife were not custodially interrogated for about four years and the Swiss authorities were not approached under the Mutual Assistance Treaty in criminal matters with Switzerland. Secondly, the nodal agency, that was “functional” since 1998, was not consulted. Thirdly, not a single person was brought to book in respect of foreign money stashed abroad, involving issues of arms-dealing, corruption and national security. Fourthly, the government had refused to disclose the names of the Liechtenstein account holders citing the DTAA with Germany, which had no application to Liechtenstein.
The attitude and inaction of the government are for every Indian to judge.
Noting the involvement of Hassan Ali and Baba Ramdev in the black money controversy, a friend asked: “You have Ali Baba. When are you catching the forty thieves?”
(Anil Divan is a Senior Advocate, and the president of the Bar Association of India. e-mail: abdsad@airtelmail.in)
Keywords: black money issue, Supreme Court of India, SIT bench, Hassan Ali Khan, Global Financial Integrity Report, money laundering Act
An excellent article by Advocate Anil Davan and all thanks to him for keeping the public updated about the growing menace of ill-gotten money being slushed away in foreign banks by the few rich at the expense of millions of poor people who are fighting for their very survival. All our hopes lie on the doors of the Supreme Court who are seized of the problem and taking steps in the right direction and the general public are keenly watching the developments in this regard. Kudos to the Hindu for publishing this article.
To the comment left by Govinda above: I hope that you were joking, if not I would not have come across a more morally repugnant person, parading his moral leprosy in public, in claiming that poor ought not be lifted out of poverty (by giving them their natural and just share of national wealth), as they will then stop being underpaid slaves of upper classes. The PM, who claimed that economic stability was far more important than fighting corruption, and his chela Sanjaya Baru who wrote a piece in Economic Times trying to give the veneer of economic logic to that proposition, and the Govt's Chief Economic Adviser, Kaushik Basu who advocated the legalizing of bribe giving, and Narayan Murthy would be in a league of their own.
Imp seq of events forgotten by Mr. Anil Divan: Mid April, SC asked Sol. Gen as to why not a SIT given that GoI had admitted that it had not done much re: investigating of H Ali from all angles. Around Ap 21 GoI announced the formation of High Level Comm. to completely oversee the investigation into Black Money issues, including Alis matters. Ap 22, SG tells Court "no need for SIT because of HLC", pleads Govt be given a chance, otherwise SC can consider the SIT. May 4 ED submits a report to SC stating that investigations into Hassan Ali not complete. 2 days later, they file a charge sheet against Hassan Ali in Mumbai w/out informing SC nor HLC. May 12 SC pulls up SG about this. SG admits he has no idea why HLC and he were not informed. Govt was misleading both Court and SG. Just follow newspaper reports. SC correctly inferred GOI was lying to it and not serious at all reg the law. Court could not overlook this fact. SIT became mandatory under Art 32, as even SC reputation would be tarnished.
Assume that the efforts of Anil Divan and Ram Jethmalani succeed in getting back 70 lakh crores back to India. Rahul Gandhi has already said that this public money. There are about 120 crores of public India. If every member of the public gets equal share of the money, a family of 4 will get about 23 lakhs. Addition of 23 lakhs to a super-rich family like Ambani's will not affect their life style. They will continue to do what they do. The upper middle class will buy some property or jewelry, but it will not change their life. They will go to work every day. A lower middle class family will be happy to receive 23 lakhs. They will spend on marrying off their daughter, buy a home, spend on luxuries or save for the future. These people will also go back to work. The poor will be very very happy. They will mostly spend off the money for essentials - like house, household stuff etc. A good chunk of these people will not go back to work. Guess what will happen to economy! disaster!!
Well what a common man can do about this???If we will vote UPA out,the next one will try to surpass the record.It is obvious that politicians don't want the names to cut out.It's like same as China. Only there economic growth is better, and we do feel that we have more rights then them.Until, we come across our corrupted political system.
Instead of finding solutions to make our politicians non-corrupt, how about common man rallying to stop corruption at all levels (starting at the lowest level in ladder). STOP taking/giving money to get things done one way or another - register your home for the right value, avoid paying construction company in black money, stop getting fradualent licenses by corrupting officials, pay your 'legitimate' income tax on time, ask for receipts for all purchases so that all necessary sales taxes are collected and paid into the government coffers, and most important 'rally' against free-bees from government and demand for education/employment at all levels. Long way to go....
Very good article and it has given all track of the problem from beginning. After reading the article I had only one response - "What the hell is happening in this country ?" We have seen cases like Stamp Scam - Thousands of crore - NO action taken against Telgi. Boforse Scam -Ottavio Quattrocchi is enjoying life with our money Common Wealth - Kalmadi is enjoying life in Jail 2G scam - it is RAJA scam actually .Just going and coming from court Mumbai Land scam - Mr. Chavan has just resigned and now enjoying holidays just waiting to become CM again. Mining Scam - Reddy Brothers are doing business never before.
No policeman is budging to catch them , no judge is budging to sentence them to death. Every thing is hunky-dory here .Every person has dystopian imagination about India when word 'BLACK MONEY' is uttered.
Thanks Anil for your revealing article on black money trail. It is astronomical amount of over Rs70lakh crore Indian money are stashed in foreign banks and foreign countries.Writer has rightly said that most of unaccuounted black money are of politicians of all hues and rich people.They are fleecing country of prime resources. He has rightly Said 'Ali Baba and his forty thieves' referring to Ali Hasan and Ramdev baba, who have big amount of unaccounted money in foreign banks and countries.Big question mark is how to retrieve these big amount.Either union govt should enact stringent Act to recover black money and reveal the names to people,who are shiphoning Indian money to abroads bank,countriesetc.One thing is also that instead of launching corruption agitation,people must harp on to flush out black money,kept in foreign banks and countries.These money must be consficated in accordance with new Act, passed by Parliament and utilised for poors'welfare.blog www.kksingh1.blogspot.com
Fantastic article. Personally, I found the last paragraph humorously apt. Given the obvious government browbeating meted out to the India Against Corruption movement, it is imperative that the MPs from all parties, at least those with some integrity, if there be any, bring pressure to bear on an arrogant, indifferent, and almost certainly culpable, if not directly guilty, Sarkar. If democratic change can only take place within parliament, then for love of the nation and her people, it is the responsibility of all MPs to effect it! We Indians are sick and tired of the blatant malpractices which attract no punishment.
A very authoritative and enlightening article. The petitioners and the advocate Mr Anil Divan are doing great job for the nation. I only hope all the Indians realize the same and stop believing blindly and vote in the name of Gandhi family.
I have been to Zurich a few months to attend a scientific congress and travelling in tourist bus whose guide compalined how he lost all the money during the financial crisis and called Swiss UBS bank as, 'United bandit society'. Now I understand after reading your article how much difficulty it would be the Govt. to recover the valuable assets of India
A very well written article and thanks to The Hindu for the fight against corruption and blackmoney. By the number of scams that SC and HCs are monitoring it seems the administration, be it at cabinet levels in center and states or the bureaucracy, has completely failed in its duties. No political party is upto the challenges that India is facing. Who can fix this system?
Kudos to Hindu and Anil Divan for this article. Clearly there is something fishy with respect to the lack of urgency. Hoeever, the 1.4 trillion $'s is a gross over estimate. There is published accurate estimates of how much European money is stashed away (accurate because the swiss government pays interest on undisclosed money to the foreign governments - something which India also can request but has yet to do so....still more fishy - also another article on this was published by The Hindu)and Indian money stashed away cannot be multiples of Germany/UK/ France etc. More likely to be about 20 to 30% of Germany or UK.
Congratulations Hindu to publish this analytical information.
Advocate Anil Divan´s article is an excellent one and equally easy for a common man to understand why our government, politicians and top bureaucrats showing no inclination to stop this menace – stealing away India’s wealth in to foreign countries.
We know in Europe for Indians - non-residents, it can’t be a tax-haven because to start with to open a bank account one has to approach the local advocate-notary to certify that the money is not related to drug or criminal activities and accordingly he will charge his fees. Secondly, as far as we know Switzerland pays one percent interest and in that they deduct the banking charges and the local taxes. One should know that stashing money abroad is equally an expensive affair and one has to start in crores, so the total 1.4 trillion $ can be true.
According to United Nations Commission against Corruption, Article 14 states clearly says that money-laundering is a criminal offence. As all the Western countries are signatory to UNCAC, they are more or less obliged to inform and help the respective governments. (Should be UNCAC signatories) when they asked for the account (black-money) holders details. UPA government is dragging this matter to the length hoping that when days pass by the public will forget.
SC appointed SIT on black money is in no way judicial overreach, it is essential for the country to get its stolen wealth back.
The political leaders instead of trying to bring the money to India, are blaming each other on the corruption and never speaking about the money kept outside the country in past.
Both Congress and BJP are insensitive to price rise and corruption. The black money TEASING inside India and abroad in several tax heavens is making the host countries richer each day.Congress and BJP are guilty in Cash-for-votes scam as discussed in the recent congress survival of NO CONFIDENCE motion initiated by communists against bad US-Nuclear deal. Third alternative with honest communists and Anna team as `insulators` needs to win more people support.
One of commentator above says "The government is corrupted till its root. even recent election results of Tamil naidu failed to open their eyes.". The result actually emboldens the current government, it reconfirms their belief that how ever corrupt you may be, you may loose one election but people will forget it and will elect you next time (because the other government too would be corrupt)
Good outline of events that led to the SIT. The commentaries by critics have been ill-informed and churlish. The reactions to use of phrase 'neo-liberal' by the Court is indicative of the hypocrisy. The existing policy makers are defended by calling their program liberal. They do not acknowledge the differences between liberal and 'neo-liberal' polities The latter need to be seen in actual practice and consequences rather than abstract models of neo-liberal theoreticians. Every failure of the neo-liberal order is met with the proposition that the failure was on account of not going far enough with economic reforms; their models do not take reality into account. NL policy is about weakening the State and non-implementation of laws democratically enacted so that the elite can plunder the nation with the help of powers that be. They are seeking to establish a bastardised constitutional order in which the loot and plunder can go on unabated. Hope SC stays firm. Ignore the charlatans.
"After Chief Justice K.G. Balakrishnan's retirement in May 2010, the matter gathered speed."..Why is this man not being investigated ?. There are several allegations against him....especially to note is the explicit demand from the respected Justice Krishna Iyer who wants the President to dismiss this man from the NHRC. 'The Hindu' need to be congratulated for such articles. But perhaps it is time for the Hindu to be less formal and more pro-active in such issues of corruption and action against people occupying high office.
This is nothing but a classic case of unholy nexus between law makers, law keepers and law breakers. I am totally disgusted to read this article. Do our rulers really look after our nation's interests or just ruling this country as proxies of some mafias? Nation has to rise against this great injustice that is going on in the name of governance in this country. The ruling group has completely abdicated their moral right to rule. The author and 'The Hindu' have done an excellent job in highlighting such a crucial issue into the public domain. Congratulations, Keep it up.
The scale of corruption in our country is massive. But we should accept that we were and are 'OK' with small scale corruption. Only large numbers like these have created some interest now. Unless and until we say NO to corruption at all levels, we will for ever be a 'Developing' country and the dream of Dr. Kalam will for ever remain a dream.
Hats off to THE HINDU. Good work in right time. Black money and corruption are the devils of democracy. The money should be brought back at any cost. It is a good chance for the Congress to prove that they are people friendly. Corruption is coming to the public domain. People are able to see what's going on. The government is transparent now. That's why the corrupt ministers and officials are brought to lime light. If Congress takes measures to bring back the hefty sum of those stashed money, it will stay in our hearts forever , else it's future will be drastic.
Sadly,this time the thieves are not 40 but may be more...
It is an open secret now. Listen to Video Clippings of Mr. Vishwa Bandu Gupta - Ex Income Tax Commissioner. He has already seen the list containing the names of Account Holders in Licenteinshein Bank. Ahmed Patel - Political Secretary of Sonia, Vilas Rao Deshmukh & P. Chidambaram. Mr. Gupta is not an ordinary man. Also this revelation was not made in a private conversation. He made these disclosures in an open meeting at IAC Rally in front of the Television Cameras that could be watched by the entire nation.
A very good article. I hope that this time Mr. Manmohan Singh should wake up, if he thinks he is a honest and dignified man. I know that chances are meager and all the social activists and petitioners are thrashed for taking initiatives at different times. But if Congress wish to remain in power in future, I think this is the time for them to act and act bold.
It appears that this problem has been there for a long time.The country has delayed planning.What is meant for today will be given only ten years hence.Meanwhile the cash can be stashed away.That is why the Black Money game came.If Government does Dynamic Development in new areas then money will be spent in development in many new areas and logistics demand that items already produced will be stretched out and better utilisation of resources will take place.Earlier continous wars in periodical succession damaged the economy.Today it appears that the Government is frightened of developing.The consequence is that the younger generation are looking for opportunities in countries which will help those countries leverage influence inside the country in the wrong places. Does the Government want to help the whole majority in India or the millions who are now expatriate by force of circumstances?
Intentions and enthusiasm of successive governments to bring back black money are very well known. Since the people involved are powerful politicians (across party lines) and corporate (who fund these political parties), it is no surprise that current govt is also showing a lackadaisical approach towards the issue. In such a scenario, the Supreme Court has rightly assumed on itself the responsibility to 'force' this govt to act against the culprits and expedite the process of information exchange from these safe havens. Also, there has to be a two-pronged focus: One focusing on money outside the country and Secondly the money inside the country. It is a common known fact that black economy alters the forces of supply-demand and distorts the macroeconomics of a country, one of direct negative impact is ofcourse - inflation !
Excellent analytical article by Anil Dhavan.Ali Baba and forty thieves has quoted robbed India and Taxpayers as reported $1.3 Trillion and I admire Hindu in their crusade against corruption.What happened to land of Ghandhi,Nehru and Patel is tragic as these monies can build infrastucture and provide jobs to millions of ordinary indians as 40% are living with a daily income of $1.50 cents as per wsj article.we owe to these people to provide justice.I urge Hindu to continue pursuing these stories as Madison rightly said knowledge is power expose them names dont matter.
The government is corrupted till its root. even recent election results of Tamil naidu failed to open their eyes. All previous congress leaders had a bad ending to their career/life. and everyone associated with them is doomed.
It appears that unless the names are made public by WikiLeaks, the truth will never come out. The Government is determined to prevent, at all costs, a political implosion of an unimaginable magnitude!
The Hindu and Anil Dewan must be complimented by one and all.A timely Lead article.Let people understand the role of Governments both the present and the past. UPA and Congress ruled the country most of the time.What answers they have got.It creates a suspicion in all our minds. This whole scale corruptions have happened only with tacit support of Administrations and various officials and Agencies.Perhaps all of them might have got some benefits.It is a big problem. Will atleast now PM accept the situation without trying to defend the policies and Party he belongs to and try to rectify the situation taking the advice from some honest experts from various fields like Judiciary, Finance, and others.By doing he will be doing a great service.If not people will also consider him one with the looters of the nation.
Point to be noted in the article "After Chief Justice K.G. Balakrishnan's retirement in May 2010, the matter gathered speed."
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